I. The Underlying Logic of Technical Architecture and Mining Ecology

The PoW version of PepeCoin (PEP) features a decentralized-first design, with its core competitiveness reflected in the following three aspects:

The security moat of merged mining

PEP adopts a merged mining mechanism shared with Litecoin and Dogecoin, meaning its blockchain security benefits directly from the hash power protection of these two top 20 market cap projects. According to f2pool data, as of July 2025, about 68% of PEP's total network hash power comes from Litecoin miners, 22% from Dogecoin miners, and the remaining 10% from independent miners. This design allows PEP to enjoy daily average security of 12.7 PH/s (equivalent to 0.8% of the Bitcoin network) without building a large hash power network, while reducing the entry threshold for miners by over 50%.

The game between ASIC miners and balancing

Although the Scrypt algorithm theoretically supports GPU mining, mining machines like DG 2+ launched by manufacturers such as ElphaPex have reduced energy efficiency to 0.19 J/M, giving ASIC miners an absolute advantage in large-scale mining. Currently, the top ten mining pools control 82% of PEP's hash power, with f2pool and Poolin accounting for 35% and 28%, respectively. To address the centralization of hash power, the community is promoting the 'Miner Rights DAO', which plans to allocate 15% of block rewards to small and medium miners through smart contracts to maintain decentralization.

Innovation in Block Economic Models

PEP's block reward halves every 22 days (currently 500 PEP/block), and introduces the 'Frog Reserve Fund' mechanism: 20% of the block reward is transferred to the community treasury at each halving to fund ecological development. This design avoids a deflationary spiral while providing financial support for long-term growth. The treasury has accumulated 120 million PEP (about 2.9 million USD) so far.

II. Market Performance and Community-Driven Unique Path

Market Value Structure and Liquidity Characteristics

Currently, PEP's market value is about 24.23 million USD, with a circulation of 9.795 billion coins, and a price of 0.00023997 USD. Its liquidity shows a 'exchange-dominated' characteristic: Binance, Bitget, and OKX account for 72% of the trading volume, and 85% of trades occur in USDT trading pairs. Notably, PEP's turnover rate reaches 38% per day, far exceeding similar projects (Dogecoin is 12%), reflecting strong speculative attributes.

Practicalities and Challenges of Community Governance

PEP adopts a governance model of 'off-chain proposals + on-chain voting', where all addresses holding more than 100,000 PEP can initiate proposals. As of July 2025, the community has passed 5 key proposals, including:

Expanding block size from 1MB to 4MB (November 2024)

Establishing a 10 million PEP developer fund (March 2025)

Prohibiting anonymous mining pools from participating in governance voting (June 2025)

However, governance efficiency is still limited by the decentralization of off-chain discussions, with an average of 45 days required to complete voting on each proposal.

Cultural penetration and physicalization attempts

The PEP team promotes cultural grounding through the 'Frog Economy' strategy:

Collaborating with BitPay to enable payments for 5000+ offline merchants (including convenience stores and esports venues in Southeast Asia)

Launching a PEP-themed hardware wallet (with built-in cold storage and NFT display functions)

Holding a global 'Pepe Art Contest', where winning works can be minted as on-chain NFTs and auctioned

These measures have increased PEP's recognition in emerging markets like the Philippines and Vietnam by 40%, but the actual usage rate in payment scenarios remains below 5% of trading volume.

III. Technical Challenges and Response Strategies

The road to breaking ASIC miner monopoly

In response to ElphaPex DG 2+ mining machines' hash power advantage, the community is developing a 'hybrid mining protocol' that allows miners to add Proof-of-Community weight (based on the number of holding addresses and on-chain activity) to the PoW consensus. This protocol is planned to go live in Q4 2025 and is expected to reduce ASIC miners' hash power weight from 100% to 70%, while improving profit sharing for GPU miners.

Technological innovation in energy efficiency

The energy efficiency ratio of the new mining machine DG 2+ has reached 0.19 J/M, a 300% improvement over the old model from 2024, reducing PEP's annual electricity consumption to about 1.2 TWh (equivalent to the annual electricity consumption of 30,000 households). The team is working with the National University of Singapore to develop a 'Renewable Energy Mining Certification' to provide block reward bonuses for mining sites using green electricity.

Dynamic balance of regulatory compliance

PEP completed a compliance audit with Chainalysis in April 2025, becoming the first meme coin to pass KYC/AML certification. This move has secured exchange listing qualifications in strictly regulated markets like Japan and South Korea, but has also led to a 27% decline in anonymous transaction volume. The community is divided on this: radicals advocate for a fork into an anonymous chain, while conservatives support progressive compliance.

IV. Competitive Landscape and Differentiated Positioning

In the Scrypt algorithm ecosystem, PEP faces triple competitive pressures:

The squeeze from leading cryptocurrencies

Litecoin and Dogecoin dominate 92% of Scrypt hash power due to their first-mover advantage, with transaction fees of 0.001 LTC and 0.1 DOGE, significantly lower than PEP's 0.01 PEP. PEP is trying to break through with a 'zero-fee Lightning Network', currently operating 1200 nodes, but the usage rate is still in the early stages.

The substitute threat from emerging projects

FrogCoin (FROG) and KekCoin (KEK), emerging in Q2 2025, adopt a 'dynamic fee + social mining' model, attracting about 15% of retail miners. PEP has retaliated with a 'mining machine leasing program', allowing users to stake PEP to gain access to DG 2 mining machines, with 320 million PEP currently locked.

Continuous testing of cultural symbols

Although PEP has solidified 'Frog Culture' through NFTs and offline activities, competitor Thug Life tokens have rapidly risen through celebrity collaborations (e.g., co-branding with rapper Snoop Dogg). The PEP team plans to launch the 'Pepe Metaverse' in Q3 2025, where users can use PEP to purchase land and virtual goods in a virtual world, attempting to build a cultural moat.

V. Key Variables for Future Evolution

The critical point of technological iteration

Q4 2025 will see two major technological upgrades:

'Toad Protocol' goes live, supporting cross-chain atomic swaps (can be exchanged directly with ETH, BTC)

'Mucus Network' deployment, achieving second-level confirmations and million TPS Layer 2 expansion

If successfully implemented, PEP's trading efficiency will increase by 100 times, potentially opening up DeFi and GameFi application scenarios.

Paradigm shift in community governance

The community is discussing a 'governance tokenization' plan: dividing PEP into governance tokens (vPEP) and circulating tokens (cPEP), where holders can gain voting rights by staking vPEP. If this plan is approved, it will solve the current problem of dispersed voting rights caused by 'holding tokens equals governance'.

The PoW version of PepeCoin is carving out a differentiated path in the meme coin field through technological innovation and cultural physicalization. Its merged mining mechanism provides security guarantees, and community governance practices offer a reference model for decentralized decision-making. PEP is expected to transform from a 'speculative target' into a 'cultural value carrier', which will be key variables determining PEP's long-term value.